Bonds sold by the government, municipalities and private companies amounted to 702 trillion rials ($2.6 billion) in the first five months of the last fiscal year (March 21- August 22, 2020).
Compared with the first five months of the year before, the sale declined 7.8%, according to data released by the Central Bank of Iran.
As expected, government bonds topped the list. CBI data shows bonds issued by the government and state/government companies reached 579.1 trillion rias ($2.14b) -- 12.1% lower than in the same period a year earlier.
Value of Murabaha bonds, issued to raise funds for government deficit spending, amounted to 169.1 trillion rials ($620 million) in the five months, 71.3% lower than the first five months the year before.
Treasury bills were worth 410 trillion rials ($1.5b), indicating a whopping 485% increase compared to the 70 trillion rials issued in the first five months of the previous year.
Bonds issued by municipalities across the country were worth 67 trillion rials ($250m), almost double on the same time in 2019.
Municipal bonds (aka known as “participatory bonds”) are debt securities issued by municipalities to fund development and infrastructure projects.
Bonds were issued by municipalities in Tehran, Mashhad, Isfahan, Ahvaz, Tabriz, Karaj and Shiraz to fund major projects, namely urban rail networks, expanding pathways, rehabilitating urban structure and developing Bus Rapid Transit (BRT) networks.
CBI data show corporate bonds generated 55.7 trillion rials ($206m) by August, down 19.3% on an annualized basis.
A corporate bond is debt issued by a company to raise capital. An investor who buys a corporate bond is effectively lending money to the company in return for interest payments. But the bonds may also actively trade on the secondary market. Compared to government bonds, corporate bonds are seen as more risky.
Iran’s bond market has grown exponentially thanks to government endeavors to tap into debt instruments to help cover budget deficits.
Market size was 2,377 trillion rials ($8.8b) by end of the previous fiscal year, 90.4% higher on an annualized basis.
Due to the de facto devaluation of the national currency, the value of the bond market has not grown in dollar terms. The value of the market was a little less than $10 billion five years ago, according to a report published by the Securities and Exchange News Agency.
Data has it that the market is dominated by the government. The share of bonds issued by the government has jumped from 10% in 2014 to 90% now.
